Loom Launches Work-for-Equity Network for Web Developers and Startups

Somewhere out there, right now, a developer is probably telling the true story of how he or she built a site or an app everyone has heard of that is making mad cash for its founders. Meanwhile, the developer collected their freelance fees or hourly rate — enough to cover a month’s rent and maybe a vacation, but nothing to brag about.

If only they had an equity stake in what they built. If only.

Chase White (Courtesy image)

That’s the type of unsung developer that Chase White is targeting with his new startup, Loom. Loom is a new platform that lets developers bid to build out the technical aspects of founders’ ideas. Developers get paid in equity, cash or a combination. But it’s the equity side of it that has people talking.

“What better way to ensure quality work than to have a stake in its success?” White said.

The platform, which launched about a month ago, lets developers bid on projects posted by startup founders. It’s free for developers, and startups pay a fee when they hire a freelance developer. Loom uses a standardized contract, with the ability to modify payment schedules and a few details, to protect developers and founders from potentially damaging fine print.

It has about a dozen projects populating its page, and White said Loom has generated a lot of interest among developers and founders.

“Everybody has been in that position,” said White, who has been part of several startups. “I don’t think you could find a single early-stage founder who hasn’t been like ‘where can I trade equity for development services.'”

The marketplace may be especially attractive for relatively inexperienced developers who want to build a portfolio, while also earning a stake in a business. Like any startup, it’s risky business. Startups sometimes fail, all but eliminating any cash return. But the potential is essentially limitless.

“It’s almost like equity is a dirty word. But it shouldn’t be. It’s compensation,” White said. “And, ultimately, you value equity at whatever you can sell it at — that’s the value of it. It may be worth more than you’re giving away or it may be less. But you have the right to decline any offer.”

I asked White if he could give a range of how much money a developer is likely to make from an equity deal on Loom. He noted that most startups ultimately fail, but he said it’s almost impossible to gauge the potential.

“Imagine if this did exist back when Facebook was being created,” he said. “It’s actually somewhat realistic that Mark Zuckerberg might have used something like this. Obviously, now there are so many startups and there are so many developers in the world, so it’s harder to imagine now.”

(courtesy graphic)

But it’s not all about money. For many developers, Loom is a place to find ideas they’re passionate about. For that reason, White said the platform also attracts experienced developers searching for passion projects and side gigs.

“We don’t focus necessarily on how much money someone stands to make on this, but rather the problems that stand to be solved,” White said.

For example, Loom’s back end was built by developers using the first version of the platform. While many entrepreneurs have enlisted co-founders with technical skills, Loom has the potential to change that dynamic by providing equity without requiring a developer to make it a full-time job.

“I think there’s a lot to be said for the builders of the world being the new early stage investors,” White said.

Loom has a team of four full-time employees and four part-time employees. White, the company’s CEO, previously co-founded Localeur, an Austin-based travel and experience recommendations company, and is a former product designer at Bazaarvoice. Co-founder Andy Nguyen is a former BuzzPoints and RoiKoi engineer. And Loom’s lead engineer, Rick Ford, has been an engineer with Bazaarvoice, HomeAway and Main Street Hub.

The company closed a $300,000 seed round in August, including investment from Brian Beard, a partner at Wilson Sonsini Goodrich & Rosati, and angel investor John Hamlin.

Loom is open to any startup based in the United States and to developers worldwide. That said, White said he and his team take pride in being made entirely by Austinites, with Austin startups and developers in mind.

“It’s a priority for us, personally and professionally, to build this as a success story to come out of Austin,” he said. “I would like to see the next Kickstarter come out of Austin, and I think that our whole team is pretty passionate about making this that reality.”